Asia-Pacific markets traded mixed Monday as gold prices surged to a record high of $5,033.99 per ounce, driven by investor demand for safe-haven assets amid geopolitical uncertainties. Meanwhile, the US warned Canada of 100% tariffs on Canadian imports if Ottawa finalizes a trade deal with China, a threat echoed by Treasury Secretary Scott Bessent and President Donald Trump.
Immediate Action & Core Facts
1. Gold reaches all-time high: Spot gold prices climbed above $5,000 per ounce for the first time, reflecting heightened global economic uncertainty.
2. US-Canada trade tensions escalate: The US threatened 100% tariffs on Canadian imports if Canada proceeds with a trade deal with China, while Canada denied any plans to negotiate without US approval.
Deeper Dive & Context
Canada-China Trade Deal Details
Canadian Prime Minister Mark Carney announced a “new strategic partnership” with China during a January 16 visit to Beijing. The preliminary deal includes:
- Reduced tariffs on Canadian canola imports to 15% (from 84%) by March 1.
- Visa-free entry for Canadian visitors to China.
- Canada’s import of 49,000 Chinese electric vehicles under preferential 6.1% tariffs.
Carney emphasized Canada’s adherence to CUSMA commitments, stating no intention to pursue free trade agreements with non-market economies like China without US notification.
US Response and Market Reactions
Treasury Secretary Scott Bessent reiterated the US stance on ABC’s This Week, warning that Canada could become a gateway for Chinese goods into the US. The threats come amid an ongoing US-Canada trade war, with the Trump administration imposing import duties on Canada.
Market reactions were mixed: Japan’s Nikkei 225 fell 1.52%, while South Korea’s Kospi rose 0.64% and the Kosdaq advanced 2.28%.
Geopolitical Implications
The tensions highlight growing friction between the US and its allies over trade policies, particularly as China seeks to expand economic ties. Analysts note that the US tariff threat could further strain North American trade relations, while Canada’s stance may influence future negotiations with China.